|By PR Newswire||
|December 6, 2012 08:00 AM EST||
NEW YORK, Dec. 6, 2012 /PRNewswire/ -- Ongoing access to capital and financing, strengthened balance sheets and divestiture activity will continue to fuel deal activity in 2013, according to PwC US. An acceleration of deals taking place during the final months of 2012 may result in a lull in activity during the first quarter; however, these sound deal fundamentals are creating optimism that the balance of 2013 will be a stronger year for U.S. mergers and acquisitions (M&A). According to PwC's U.S. M&A outlook, dealmakers remain hyper vigilant on diligence during the M&A decision making process, analyzing each outcome and the various impacts on investment and return scenarios to achieve certainty of deal success.
"The fundamentals for sustained M&A activity in 2013 are solid, with improving corporate confidence, increasing private equity activity from both a buy and sell side perspective, and relatively healthy debt markets. There remains strong competition for quality assets as both corporates and private equity continue to seek out deals to fuel their growth and deploy capital," said Martyn Curragh, PwC's U.S. Deals Leader. "We've been supporting a range of buyers and sellers across a broad spectrum of industries, helping them raise capital through high yield offerings and providing diligence and valuation analyses for potential deals. Dealmakers have been very cautious and disciplined in evaluating transactions. They are placing a premium on a thorough analysis of potential risks and exposures and are seeking to ensure there is broad functional support to successfully manage deal execution and reduce the risk of value leakage."
With capital ready to be deployed, along with the increasing availability of financing, PwC expects companies and financial sponsors to use M&A to enhance their growth prospects in the new year. Corporate cash levels remain steady at $1.1 trillion for the S&P 500, indicating continued opportunity for companies to put their capital to work through M&A. In the eleven months ending November 2012, there were a total of 7,585 transactions representing $705 billion in disclosed deal value. In October alone, deal value spiked to a 14 month high, reaching $96 billion and with 754 deals, October was the most active month since August 2011. In terms of deal size -- and with the absence of "transformative" mega deals -- middle market deals have been the "silver lining" for deal activity, accounting for 98 percent through November in 2012. PwC expects this trend in middle market deals to continue in 2013.
"Both corporate and private equity players are thinking about transactions to expand market share, build brands and fuel their long term strategic plans. In today's environment, companies must be agile to act with discipline, speed, and unbiased thoroughness to execute when a good potential acquisition comes to market," said John Potter, Deals partner at PwC. "A recent poll during our M&A integration webcast found that 89 percent of executives expect to see similar or increased M&A activity over the next year, with 45 percent expected to plan a deal within the next six months. Deal making, whether by acquisition or divestiture, is very much at the top of the agenda for those pursuing new growth opportunities in 2013."
In light of available cash and growth strategies, a desire to get deals done has heightened the competition among corporate and private equity buyers. According to PwC, more bidders are taking a longer look at a given target over the past 12 months.
Divestitures accounted for 43 percent of total disclosed deal value and 30 percent of deals overall, the highest level since 2005, and should remain a key driver for deal making in the year ahead as companies seek to unlock value in assets. Those that are currently looking to divest assets have stepped up the sell side diligence process to showcase potential value for quality assets for potential buyers.
"Successful divestitures in today's marketplace require a sharp focus and rationale around the opportunities that an asset has to grow. An accurate portrayal of long-term deal value for an asset helps ensure that a buyer and a seller can meet at a reasonable price and unlock value and opportunity for the future of both companies involved in the deal," according to Ron Chopoorian, PwC's U.S. Divestitures Leader. "With preparedness and rigor around the sell side process serving as essential components for successful divestitures, we are seeing auctions become broader and participants 'staying in play' for longer periods of time."
With a total of 1,334 transactions and $128 billion in value, private equity deals accounted for 18 percent of total deal value, indicating that while corporates continue to drive overall activity, private equity's involvement in the marketplace remains very active. With roughly $1trillion in dry powder waiting to be deployed, sophisticated private equity buyers are scenario planning for every deal outcome to generate the best returns for their investments.
According to PwC, private equity continues to prepare for multiple exit options, including refinancing debt, recapitalizations, IPOs and sales to strategic buyers to take advantage of shifting windows of opportunity. On the buy side, private equity remains a very active deal participant, especially in the middle market and with divested corporate assets. The increased availability of high yield debt is a main driver fueling private equity activity in the U.S. marketplace.
With creditors' thirst for higher yields, financing for transactions remains attractive for financial sponsors to pursue new deals and monetize existing investments. While the market remains extremely competitive for high yield offerings, businesses raising capital should be thoroughly prepared and have the infrastructure in place to address the needs of their public investors. According to PwC, proper preparation for debt financing transactions enables a business to communicate a compelling story and address creditor inquiries in a timely fashion. This debt preparedness helps add increased certainty to a deal for sellers, and guide buyers through an accelerated time table to complete a transaction.
Notable sectors that continue to present opportunities include:
Oil & Gas -- Both volume and value levels are close to 2011 levels with an increase in mega deals led by private equity funds that have increased their investment and exposure to the energy industry. PwC expects deal activity to increase in 2013, with ongoing consolidation in the shale plays very likely. Large international oil companies are expected to continue to increase their positions in the unconventional plays in North America. Private equity will likely continue to invest heavily in the energy space -- both upstream and midstream. Foreign buyers may increase activity in 2013 looking to corporate transactions to help them increase inventory of projects as well as the size and quality of their management teams. According to PwC, the likelihood of more energy related mega deals in 2013 is certainly higher.
Financial Services -- Deal activity remains steady compared to 2011 in terms of announced deals. Despite receding asset quality and valuation concerns across the industry, the prolonged period of implementation of new regulatory standards has created additional impediments to deals. Going forward, both domestic and global financial institutions continue to seek divestiture of non-strategic operations in seeking to further bolster capital levels and unlock asset value. At the same time, as organic loan growth has slowed, many banks will look to acquire asset-generating businesses. PwC expects valuation gaps will narrow which, coupled with resolution of regulatory uncertainty, will likely drive increased deal volume in the coming year. While there has been limited private equity activity within the insurance and banking sectors, there has been an increase in private equity deal activity within the asset management sector, a trend PwC expects to continue in 2013.
Healthcare & Pharmaceuticals -- Throughout 2012, health industries M&A activity was hindered by the uncertainty of the presidential election. Now with a near-certain implementation of the Affordable Care Act (ACA) and its sweeping reforms impacting business models, PwC expects 2013 to be a banner year for M&A activity across health industries. For healthcare providers, this momentum will be buoyed by economic pressure to accept lower reimbursement rates and as this pressure mounts, margin compression on single-site or inefficient operators will force divestiture or partnering strategies. Consistent with the last few years, continued acceleration of deals involving financially struggling providers seeking lifelines from larger, healthier systems is likely to continue. In addition to provider-to-provider deals, 2013 may see the trend of providers partnering or merging with payers continue. For payers, no deals are more prevalent than the large health insurers positioning for the impact of the insurance exchanges and increased Medicare and Medicaid enrollments. And while high-profile, high-value deals of this nature may be less frequent in 2013, PwC expects health insurers to continue seeking enrolment expansion through M&A during 2013. In the pharmaceutical industry, large companies continue to reshuffle their businesses portfolios and seek new avenues for growth in emerging markets. Key players in pharma continue to experiment with new business models involving non-pharma categories, joint ventures or divestitures as a means to unlock shareholder value. Consolidation remains active among specialty pharma and personalized medicine companies, while medical device companies explore the need to gain scale in the U.S. and abroad.
Technology -- While technology deal volume trended lower in 2012, deal value exceeded 2011 through the third quarter -- momentum which began in the final three months of 2011 with large mega deals contributing to a record quarter for deal value. Despite higher overall values through September 2012, PwC expects a slight reduction in full year acquisition value among technology companies due in part to the global macroeconomic environment. However, PwC sees a silver lining in very early signs of growing activity among large technology companies to re-evaluate their product and business portfolios and initiate divestitures. According to PwC, there are multiple drivers for future M&A activity in the sector including changes in enterprise customers' demand towards cloud technology services, continuing high growth in social and mobile sectors and a favorable appetite among technology oriented private equity funds for slower growing but cash flow producing assets.
Note to editors: A snapshot of PwC's data for U.S. M&A activity is available upon request. The M&A figures captured in PwC's M&A outlook is a compilation of data from Thomson Reuters with analysis by PwC. This data is an aggregate of deal activity from around the world and includes multiple sources to confirm deal occurrence and respective characteristics. U.S. deals are defined as all deals done by U.S. acquirers including U.S. outbound investments. Deal value is defined as the target company's ranking value including net debt. A divestiture is defined as the partial or full disposition of an asset or investment (e.g. carve-out, asset sale, etc.). Middle market deals are defined as deals with a value of $1 billion or less.
For further insight on the outlook for the M&A landscape in 2013, join PwC's Deals webcast on Tuesday, December 18th at 1:00 p.m. E.T. To register, visit: www.meetpwc.com/MandAoutlook2013.
PwC's Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, our experienced M&A specialists assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and advise on business-wide risks and value drivers in their transactions for more empowered negotiations, decision-making and execution. We help clients expedite their deals, reduce their risks, capture and deliver value to their stakeholders and quickly return to business as usual. Our local and global deal strength is derived from over 1,400 deal professionals in 21 cities in the U.S. and over 9,800 deal professionals across a global network of firms in 75 countries. In addition, our network firm PwC Corporate Finance provides investment banking services within the U.S. For more information, visit www.pwc.com/us/deals.
About the PwC Network
PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
While there are hundreds of public and private cloud hosting providers to choose from, not all clouds are created equal. If you’re seeking to host enterprise-level mission-critical applications, where Cloud Security is a primary concern, WHOA.com is setting new standards for cloud hosting, and has established itself as a major contender in the marketplace. We are constantly seeking ways to innovate and leverage state-of-the-art technologies. In his session at 16th Cloud Expo, Mike Rivera, Seni...
May. 26, 2015 11:14 AM EDT Reads: 293
SYS-CON Events announced today that EnterpriseDB (EDB), the leading worldwide provider of enterprise-class Postgres products and database compatibility solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. EDB is the largest provider of Postgres software and services that provides enterprise-class performance and scalability and the open source freedom to divert budget from more costly traditiona...
May. 26, 2015 11:00 AM EDT Reads: 1,971
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will addresses this very serious issue o...
May. 26, 2015 11:00 AM EDT Reads: 503
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
May. 26, 2015 11:00 AM EDT Reads: 5,836
The Internet of Things is a misnomer. That implies that everything is on the Internet, and that simply should not be - especially for things that are blurring the line between medical devices that stimulate like a pacemaker and quantified self-sensors like a pedometer or pulse tracker. The mesh of things that we manage must be segmented into zones of trust for sensing data, transmitting data, receiving command and control administrative changes, and peer-to-peer mesh messaging. In his session a...
May. 26, 2015 11:00 AM EDT Reads: 4,152
In their general session at 16th Cloud Expo, Michael Piccininni, Global Account Manager – Cloud SP at EMC Corporation, and Mike Dietze, Regional Director at Windstream Hosted Solutions, will review next generation cloud services, including the Windstream-EMC Tier Storage solutions, and discuss how to increase efficiencies, improve service delivery and enhance corporate cloud solution development. Speaker Bios Michael Piccininni is Global Account Manager – Cloud SP at EMC Corporation. He has b...
May. 26, 2015 10:30 AM EDT Reads: 1,780
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
May. 26, 2015 10:15 AM EDT Reads: 1,860
EMC Corporation on Tuesday announced it has entered into a definitive agreement to acquire privately held Virtustream. When the transaction closes, Virtustream will form EMC’s new managed cloud services business. The acquisition represents a transformational element of EMC’s strategy to help customers move all applications to cloud-based IT environments. With the addition of Virtustream, EMC completes the industry’s most comprehensive hybrid cloud portfolio to support all applications, all workl...
May. 26, 2015 10:15 AM EDT Reads: 528
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists will peel away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud en...
May. 26, 2015 10:00 AM EDT Reads: 2,150
In a recent research, analyst firm IDC found that the average cost of a critical application failure is $500,000 to $1 million per hour and the average total cost of unplanned application downtime is $1.25 billion to $2.5 billion per year for Fortune 1000 companies. In addition to the findings on the cost of the downtime, the research also highlighted best practices for development, testing, application support, infrastructure, and operations teams.
May. 26, 2015 10:00 AM EDT Reads: 1,605
We are all here because we are sold on the transformative promise of The Cloud. But what good is all of this ephemeral, on-demand infrastructure if your usage doesn't actually improve the agility and speed of your business? How must Operations adapt in order to avoid stifling your Cloud initiative? In his session at DevOps Summit, Damon Edwards, co-founder and managing partner of the DTO Solutions, will highlight the successful organizational, process, and tooling patterns of high-performing c...
May. 26, 2015 10:00 AM EDT Reads: 5,480
There is no question that the cloud is where businesses want to host data. Until recently hypervisor virtualization was the most widely used method in cloud computing. Recently virtual containers have been gaining in popularity, and for good reason. In the debate between virtual machines and containers, the latter have been seen as the new kid on the block – and like other emerging technology have had some initial shortcomings. However, the container space has evolved drastically since coming on...
May. 26, 2015 09:45 AM EDT Reads: 1,920
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists will address the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affec...
May. 26, 2015 09:45 AM EDT Reads: 1,978
T-Mobile has been transforming the wireless industry with its “Uncarrier” initiatives. Today as T-Mobile’s IT organization works to transform itself in a like manner, technical foundations built over the last couple of years are now key to their drive for more Agile delivery practices. In his session at DevOps Summit, Martin Krienke, Sr Development Manager at T-Mobile, will discuss where they started their Continuous Delivery journey, where they are today, and where they are going in an effort ...
May. 26, 2015 09:30 AM EDT Reads: 1,946
SYS-CON Media named Andi Mann editor of DevOps Journal. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Andi Mann, Vice President, Strategic Solutions, at CA Technologies, is an accomplished digital business executive with extensive global expertise as a strategist, technologist, innovator, marketer, communicator, and thought lea...
May. 26, 2015 09:00 AM EDT Reads: 2,109
Even though it’s now Microservices Journal, long-time fans of SOA World Magazine can take comfort in the fact that the URL – soa.sys-con.com – remains unchanged. And that’s no mistake, as microservices are really nothing more than a new and improved take on the Service-Oriented Architecture (SOA) best practices we struggled to hammer out over the last decade. Skeptics, however, might say that this change is nothing more than an exercise in buzzword-hopping. SOA is passé, and now that people are ...
May. 26, 2015 09:00 AM EDT Reads: 3,880
Enterprises are fast realizing the importance of integrating SaaS/Cloud applications, API and on-premises data and processes, to unleash hidden value. This webinar explores how managers can use a Microservice-centric approach to aggressively tackle the unexpected new integration challenges posed by proliferation of cloud, mobile, social and big data projects. Industry analyst and SOA expert Jason Bloomberg will strip away the hype from microservices, and clearly identify their advantages and d...
May. 26, 2015 09:00 AM EDT Reads: 2,314
The Domain Name Service (DNS) is one of the most important components in networking infrastructure, enabling users and services to access applications by translating URLs (names) into IP addresses (numbers). Because every icon and URL and all embedded content on a website requires a DNS lookup loading complex sites necessitates hundreds of DNS queries. In addition, as more internet-enabled ‘Things' get connected, people will rely on DNS to name and find their fridges, toasters and toilets. Acco...
May. 26, 2015 09:00 AM EDT Reads: 5,366
You often hear the two titles of "DevOps" and "Immutable Infrastructure" used independently. In his session at DevOps Summit, John Willis, Technical Evangelist for Docker, will cover the union between the two topics and why this is important. He will cover an overview of Immutable Infrastructure then show how an Immutable Continuous Delivery pipeline can be applied as a best practice for "DevOps." He will end the session with some interesting case study examples.
May. 26, 2015 09:00 AM EDT Reads: 2,318
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. 8th International Big Data Expo, co-located with 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. As advanced data storage, access and analytics technologies aimed at handling high-volume and/or fast moving data all move center stage, aided by the cloud computing bo...
May. 26, 2015 08:45 AM EDT Reads: 2,092